Editor’s note
Editor’s note: Corrigendum released on September 9, 2014. Original judgment has been corrected with text of corrigendum appended.
Court File and Parties
COURT FILE NO.: 12-38626
DATE: 2014-08-14
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Muhammed Chahine and Rabab Al-Dahak
Paul R. Sweeny, for the Plaintiffs
Plaintiffs
- and -
Alfredas Grybas
Defendant
Jennifer Matic, for Primmum Insurance Company
HEARD: July 29, 2014
REASONS FOR JUDGMENT
LOFCHIK, J.
[1] This is a motion by the Plaintiffs to add their own insurer, Primmum Insurance Company (“Primmum”), as a Defendant to the within action under the unidentified motor vehicle coverage provisions of their policy and to make corresponding amendments to the Statement of Claim.
[2] The proposed Defendant, Primmum, issued a motor vehicle liability insurance policy to the Plaintiff for the policy period October 18, 2010 to October 18, 2011. This policy included coverage with respect to unidentified and uninsured motorist claims pursuant to S.265 of the Insurance Act, RSO 1990, c.1-8. Further, the Plaintiffs purchased an additional endorsement, Ontario Policy Change Form 44R (“OPCF 44R”) which provided additional coverage for injuries sustained in a motor vehicle accident involving unidentified, uninsured and underinsured motorists, in respect of claims that may exceed the limit of the minimum of statutory coverage.
[3] The Plaintiff, Muhammed Chahine was the operator of a motor vehicle that was involved in a collision on December 16, 2010. The Plaintiff’s vehicle was rear-ended by the vehicle owned and operated by the Defendant. The Plaintiff was transported to the hospital from the accident scene. The Plaintiff had no knowledge of the involvement of any other vehicles. The day after the accident, the Plaintiff attended at the police department and obtained a copy of the accident report. The accident report did not specifically identify another vehicle involved in the accident.
[4] Following delivery of the Statement of Claim, defence counsel appointed on behalf of the Defendant advised of the existence of a third party alleged to have struck the Defendant’s vehicle. The complete police report identified the involvement of an unidentified third party.
[5] The Plaintiff asserts that Primmum should be added as a Defendant on the basis that no limitation period has expired. In accordance with the reasoning of the Court of Appeal in Schmitz v. Lombard General Insurance Company, the limitation period for the adding of the Plaintiff’s own insurer commences to run at a date after a request for indemnification has been made by the insured. In the alternative, the issue of when the Plaintiff knew or ought to have known that all of the liability would rest with an unidentified third vehicle is a fact which needs to be determined by the trial judge. Finally, Primmum should be added as a Defendant for the underinsured coverage under the OPCF 44R if the damages exceed $200,000 on the reasoning of the Court of Appeal in Schmitz.
[6] A Statement of Claim was issued on December 13, 2012. The Statement of Claim names Alfred Grybas as the only Defendant.
[7] After the Statement of Claim was served, the Defendant retained counsel. On or about July 17, 2013, defence counsel wrote to Plaintiff’s counsel and advised of the Defendant’s position that he was rear-ended by an unidentified motor vehicle.
[8] Prior to the letter being received from defence counsel on or about July 17, 2013, the Plaintiff was unaware of the existence of this unidentified motorist.
[9] A review of the accident report provided to the Plaintiff, and that provided by defence counsel with her letter of July 17, 2013, reveals certain discrepancies between the two. In particular, the report received by the Plaintiff does not include the investigating officer’s description of collision and diagram, and more specifically did not include a description of an unknown driver.
[10] On or about January 17, 2014, Plaintiff’s counsel arrange for an articling student to attend at the Hamilton Police Service to inquire about these discrepancies. This student learned that a motor vehicle collision report consists of 5 carbon copy pages, and that the back 2 pages are different than the initial 3 pages. These initial 3 pages include, among other things, the investigating officer’s description of the collision and diagram. The back 2 pages do not include this information.
[11] It is the back 2 pages that are ordinarily provided to drivers at the scene of the accident.
[12] The student of Plaintiff’s counsel learned further that the initial 3 pages are not completed at the scene of the accident, but are completed later by the investigating officer.
[13] Counsel for Primmum argues that there was sufficient information contained in the Motor Vehicle Accident Report obtained by the Plaintiff to raise the issue of the involvement of a white, identified vehicle that failed to remain at the scene of the accident. They argue that the Plaintiff, by making reasonable inquiries, could have ascertained the fact that there was an unidentified motor vehicle involved in the accident before expiration of the limitation period which they argue commenced to run on the date of the accident. They argue that the Plaintiffs through due diligence could have ascertained that an unidentified vehicle was involved in the motor vehicle accident in question within two years of the accident date, and that the limitation period for adding an insurer with respect to uninsured or unidentified motorist claims begins to run when the Plaintiff knew or ought to have known about the involvement of an unidentified motorist.
Law and Analysis
Issues
[14] (a) Ought Primmum to be added as a defendant to provide unidentified vehicle coverage in accordance with the Court of Appeal’s reasoning in the Schmitz case?
(b) Ought Primmum to be added as a defendant with leave to plead the limitation period on the basis that the determination of when the Plaintiff knew, or ought to have known, that the accident was solely the fault of an unidentified driver is a matter to be determined on the evidence by the Trial Judge?
(c) Ought Primmum to be added as a defendant on the basis of the underinsured coverage provided by the OPCF 44R based on the reasoning in the Schmitz case?
Addition of parties and amendment of pleadings
[15] The rule governing the addition of a party in a proceeding is found under Rule 5.04(2) of the Rules of Civil Procedure, which reads as follows:
At any stage of a proceeding the court may by order add, delete or substitute a party or correct the name of a party incorrectly named, on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.
Rule 5.04(2) of the Rules of Civil Proceedure, R.R.O. 1990 Reg. 194.
[16] In Addition, Rule 26.02 states that a party may amend its pleading to add a new party, with leave of the Court.
Rule 26.02 of the Rules of Civil Procedure, R.R.O. 1990 Reg. 194.
[17] The general power of the court to amend pleadings is found under Rule 26.01 of the Rules of Civil Procedure, which reads as follows:
On a motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.
Rule 26.01 of the Rules of Civil Procedure, R.R.O. 1990 Reg. 194.
Relevant Statutory Provisisions
[18] Section 265(1)(a) of the Insurance Act reads as follows:
265 (1) Every contract evidenced by a motor vehicle liability police shall provide for payment of all sums that,
(a) a person insured under the contract is legally entitled to recover from the owner or driver of an uninsured automobile or unidentified automobile as damages for bodily injuries resulting from an accident involving an automobile;
[19] R.R.O. 1990, Regulation 676 reads in part:
- The terms, conditions, provision, exclusion and limits set out in the following Schedule apply to payments under a motor vehicle liability policy under subsection 265(1) of the Act and shall be attached to or included in every motor vehicle liability policy, as a Schedule in or to the policy.
LIMITED AND EXCLUSIONS
- (1) the insurer shall not be liable to make any payment,
(c) where the person insured under the contract is entitled to recover money under the third party liability section of a motor vehicle liability policy;
ACCIDENTS INVOLVING UNIDENTIFIED AUTOMOBILE
- (1) This section applies if an unidentified automobile has caused bodily injury or death to a person under the contract.
DETERMINATION OF LEGAL LIABILITY AND AMOUNT OF DAMAGES
- (1) The determination as to whether the person insured under the contract is legally entitled to recover damages and, if so entitled, the amount thereof shall be determined.
(c) by a court of competent jurisdiction in Ontario in an action brought against the insurer by the person insured under the contract, and unless the determination has been previously made in a contested action by a court of competent jurisdiction in Ontario, the insurer may include in its defence the determination of liability and the amount thereof.
NOTICE AND PROOF OF CLAIM
- (1) A person entitled to make a claim in respect of the bodily injury or death of a person insured under the contract shall do so in accordance with this section.
(2) The claimant shall give the insurer written notice of the claim within thirty days after the accident or as soon as is practicable after that date.
Applicable Limitation Period
[20] Section 4 of the Ontario Limitations Act, 2012, S.O. 2002 c. 24 (the “Limitations Act”) reads:
Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.
[21] Section 5 of the Limitations Act reads:
5(1) A claim is discovered on the earlier of
(a) The day on which the person with the claim first knew,
(i) That the injury, loss or damage had occurred,
(ii) that the injury, loss or damage was caused by or contributed to by an act or omissions.
(iii) That the act or omission was that of the person against whom the claim is made, and
(iv) That, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate remedy to seek to remedy it.
[22] Counsel for Primmum argues that based on the decision in Wilkinson and Braithwaite, the two-year limitation period for adding the unidentified and uninsured motorist coverage insurer runs from the date of the accident and that as a result the Plaintiff’s claim against Primmum for unidentified and uninsured motorist coverage would be statute barred. Wilkinson v. Braithwaite, [2011] O.J. No. 1714 (ONT. SUP. CT.).
[23] In that case, the court refused to add the Plaintiff’s insurer, Liberty Mutual, who provided unidentified and uninsured motorist coverage on the basis that the limitation period had expired and that the Plaintiff had failed to satisfy its onus that it would have been highly unlikely through due diligence to have obtained the necessary information to include Liberty Mutual as a defendant within two years of the accident.
[24] Plaintiff’s counsel relies on the decisions in Markel Insurance Co. of Canada v. ING Insurance Co. of Canada (2012 ONCA 218, 109 OR 3rd 652), and Schmitz v. Lombard General Insurance Company of Canada (2014 ONCA 88), to support their argument that the two-year limitation period does not begin to run from the date of the accident.
[25] In Markel Insurance Co. of Canada v. ING Insurance Co. of Canada (“Markel”), the Ontario Court of Appeal addressed the commencement of limitation periods applicable to loss transfer claims between insurers regarding the payment of statutory accident benefits.
[26] In Markel, the Court addresses sections 5(1)(a)(ii) and (iii) of the Limitations Act. The Court determined that, in the context of that case, subsections (ii) and (iii) raised the following question: When does the first party insurer know that there is a loss “caused” by an “omission” of the second party insurer? The Court held that subsections (ii) and (iii) required that the second party insurer must have done, or omitted to do, something that can be said to have caused a loss. The second party insurer cannot be said to have omitted to indemnify if there was no request for indemnification. Therefore, the Court held that:
It follows that items (ii) and (iii) cannot be satisfied until the first party insurer has asserted the loss transfer claim against the second party insurer to trigger a legally enforceable claim or obligation.
Once a legally valid (i.e. apart from any issue as to limitations) claim is asserted by the first party insurer’s Request for Indemnification, the second party insurer is under a legal obligation to satisfy it. All the facts are present to trigger the legal obligation [on] the part of the second party insurer to indemnify the first party insurer for the loss. The situation has crystallized into a complete and valid legal claim that is immediately enforceable against the second party insurer. There is nothing more that must happen to create the legal obligation of the second party insurer to pay the claim.
[27] The important holdings in Markel are that the discovery provisions in the Limitations Act apply and that the claim is discovered, within the meaning of section 5 of the Act, when the second party insurer fails to indemnify in response to a request.
[28] In Schmitz v. Lombard General Insurance Co. of Canada (“Schmitz”), the Court of Appeal addressed the issue of the commencement of the limitation period in claims made by a Plaintiff against his own insurer. In particular, Schmitz dealt with a claim for underinsured motor vehicle coverage.
[29] In Schmitz, the insurer argued that the limitation period of S.17 of the OPCF 44 applied. It reads as follows:
Every action or proceeding against the insurer for recovery under this change form shall be commenced within 12 months of the date that the eligible claimant or his or her representative knew or ought to have known that the quantum of claims with respect to an insured person exceed the minimum limits for motor vehicle liability insurance in the jurisdiction in which the accident occurred, but this requirement is not a bar to an action which is commenced within 2 years of the date of the accident.
[30] The insurer advanced two arguments in support of its position that the limitation period started to run when the Respondents knew, or ought to have known, that the quantum of their claims exceeded $1 million. First, it argued that the definition of discoverability in S.17 applied, rather than that set out in S.5 of the Limitations Act. Secondly, it argued that, if S.5 of the Act is the operative discoverability provision, then on a proper application of S.5 to the unique circumstances involving claims under OPCF 44R, the limitation period started when the Plaintiff knew, or ought to have known, that the claim exceeded $1 million.
[31] The first argument was rejected on the basis of the statutory interpretation and the decision in Markel. Given that S.4 of the Act applies, so too does S.5. Accordingly, in applying the decision in Markel, S.5 of the Act must apply.
[32] The Court held that Markel applied with equal force to claims made under OPCF 44R. The Court of Appeal in Schmitz ruled that:
Once a legally valid claim for indemnification under OPCF 44R is asserted, the underinsured coverage insurer is under a legal obligation to respond to it. To paraphrase and adapt Sharpe J.A.’s observations at para 27 of Markel, the claim for indemnity under the OPCF 44R “suffers a loss from the moment [the insurer] can be said to have failed to satisfy its legal obligation [under OPCF 44R]. Thus, the claimant suffers a loss “caused by” the underinsured coverage insurer’s omission in failing to satisfy the claim for indemnity the day after the demand for indemnification was made.
[33] The Court rejected the argument that the interpretation would prejudice the insurer. The Court also noted that there were other protections, including section 14 of the OPCF 44R and the requirement of timely notice, to ensure that the insured does not suffer prejudice.
[34] On the second argument, the Court of Appeal held that starting a limitation period with reference to when the demand for indemnification was made does not limit when that demand can and should be made.
[35] The reasoning applied in the Schmitz case is, that unlike the claim of an injured party against a tortfeasor when the limitation period commences to run when the injury occurs or when the Plaintiff knew or ought to have known of the injury, the claim of an insured against his own insurer is a claim under a contract. There is no claim until the insurer has breached its contract to indemnify the Plaintiff by refusing to pay the Plaintiff’s claim.
[36] The reasoning in Schmitz applies in this case. The Plaintiffs do not know they have a claim against the insurer until they know: that the accident was caused by an unidentified vehicle; that there is no other third party liability section of a policy under which they could recover; and a demand is made of the insurer and that the insurer has denied the claim.
[37] Contrary to the authorities of Schmitz and Markel, Primmum submits that the limitation period begins to run when the Plaintiff either knew, or ought to have known, about the existence of the unidentified motorist. This position is not consistent with the application of the principles in Schmitz which apply as much to an unidentified motorist situation as to an underinsured situation.
[38] Primmum has acknowledged the applicability of section 5 of the Limitations Act. The proper question to be asked is not when the Plaintiff either knew or ought to have known about the unidentified motorist, but when did the Plaintiff either know or ought to have known it suffered a loss, “caused” by an “omission” of Primmum.
[39] In the case at bar, no such claim for indemnification has been made. Accordingly, the limitation period for a claim against his own insurer has yet to be triggered. The demand must first be made. The insurer is not prejudiced, as it is protected by the requirements for notice and has rights with respect to that notice.
[40] Section 8(1) of Regulation 676 makes it clear that the requirements of the Schedule have to be complied with before an action can be brought. The effect of the notice provisions in section 6 and whether relief from forfeiture should be granted requires an examination of all relevant facts and would be a matter for the trial judge. While the Defendant is entitled to plead section 8(1) in its Statement of Defence, the Defendant is not entitled to plead the limitation period.
Underinsured Coverage
[41] In any event, Primmum should be added for the underinsured coverage in the OPCF 44R.
[42] The analysis of the Court of Appeal in Schmitz for the underinsured coverage applies with respect to Primmum in this case. In Schmitz, the limitation period applicable to claims under OPCF 44R would start to run upon a request being made for indemnification. That is the same situation as arises in the present case. Accordingly, Primmum should be added as a defendant under the OPCF 44R for underinsured coverage.
[43] Counsel for the Primmum argues that the decision in Schmitz should only be applied to underinsured motorist claims under the OPCF 44R and not liberally applied to unidentified motorist claims under regulation 676. I disagree. As stated above the reasoning in Schmitz applies to both types of claims.
[44] Counsel for Primmum in the alternative argues that if it is determined that the limitation period has not expired, Primmum will suffer prejudice if added to this action as it has been over three years and five months since the accident and the proposed defendant has lost valuable time in investigating the accident and whether the identity of the motorist could be obtained by speaking to lay witnesses and investigating the accident scene for video surveillance of the area. In my view, the issue of whether or not Primmum has been prejudiced is best dealt with by the trial judge in dealing with the defence which Primmum will undoubtedly raise as to lack of required notice under the provisions of the Insurance Act.
[45] Order to issue that the Plaintiff be granted leave to amend its statement of claim to add Primmum Insurance Company as a Defendant and plead the necessary facts in respect of their unidentified motorist and underinsured motorist coverage claims.
[46] The Plaintiffs are entitled to their costs of this motion. If the parties cannot agree on quantum of costs they may make written submissions with respect to same. Submissions of the Plaintiff to be delivered within 15 days of the release of these reasons, with the responding submissions of the Respondent to be delivered within 10 days of receipt of the Plaintiff’s submissions or the expiry of time for the Plaintiff to make such submissions. The Plaintiff shall deliver any reply submissions within 5 days of receipt of the Respondent’s submissions or the expiry of the time for the respondent to deliver their submissions, whichever comes first.
Lofchik, J.
Released: 14th August, 2014
Corrigendum
COURT FILE NO.: 12-38626
DATE: 2014-09-09
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Muhammed Chahine and Rabab Al-Dahak
Paul R. Sweeny, for the Plaintiffs
Plaintiffs
- and -
Alfredas Grybas
Defendant
Jennifer Matic, for Primmum Insurance Company
HEARD: July 29, 2014
CORRIGENDUM
LOFCHIK, J.
[1] The last sentence of paragraph 40 of my Reasons for Judgment as issued reads as follows:
While the Defendant is entitled to plead sections 8(1) and (3) in its Statement of Defence, the Defendant is not entitled to plead the limitation period.
[2] The sentence should read:
While the Defendant is entitled to plead section 8(1) in its Statement of Defence, the Defendant is not entitled to plead the limitation period.
Lofchik, J.
Released: 9th September, 2014
COURT FILE NO.: 12-38626
DATE: 2014-09-09
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Muhammed Chahine and Rabab Al-Dahak
Plaintiffs
- and –
Alfredas Grybas
Defendant
CORRIGENDUM
TRL:co
Released: 9th September, 2014